NEVADA
(State
or other jurisdiction of
incorporation
or organization)
|
88-0397234
(I.R.S.
Employer Identification No.)
|
Page
Number
|
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3
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5
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6
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8
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20
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27
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28
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28
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28
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28
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28
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28
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28
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29
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2007
|
2006
|
|||||
|
(Unaudited)
|
(Audited)
|
|||||
CURRENT
ASSETS
|
|
|
|||||
Cash
and cash equivalents
|
$
|
231,988
|
$
|
129,453
|
|||
Accounts
receivable, net of allowance of $18,228 and
$15,695
as of March 31, 2007 and December 31, 2006 respectively |
187,356
|
170,626
|
|||||
Prepaid
expenses
|
18,727
|
23,676
|
|||||
Total current assets
|
438,071
|
323,755
|
|||||
|
|||||||
PROPERTY
AND EQUIPMENT, net
|
280,552
|
274,269
|
|||||
CUSTOMER
LIST, net of accumulated amortization
of $3,987,236
and $3,716,215 as of March 31, 2007 and December 31, 2006 respectively |
2,416,355
|
1,721,233
|
|||||
GOODWILL,
net of impairment
|
1,288,559
|
1,288,559
|
|||||
OTHER
ASSETS
|
440,505
|
437,197
|
|||||
TOTAL
ASSETS
|
$
|
4,864,042
|
$
|
4,045,013
|
|
2007
|
2006
|
|||||
|
(Unaudited)
|
(Audited)
|
|||||
CURRENT
LIABILITIES
|
|
|
|||||
|
|
|
|||||
Accounts
payable
|
$
|
53,483
|
$
|
105,814
|
|||
Accrued
expenses
|
273,772
|
426,216
|
|||||
Deferred
revenue
|
679,105
|
588,766
|
|||||
Notes
payable
|
613,080
|
286,114
|
|||||
Notes
payable - stockholders
|
-
|
46,861
|
|||||
Total
current liabilities
|
1,619,440
|
1,453,771
|
|||||
|
|||||||
NOTES
PAYABLE, less current portion
|
407,904
|
63,113
|
|||||
NOTES
PAYABLE - STOCKHOLDERS, less current portion
|
814,946
|
814,946
|
|||||
TOTAL
LIABILITIES
|
2,842,290
|
2,331,830
|
|||||
|
|||||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
Stock, $.001 par value, 10,000,000 shares
|
|||||||
authorized,
0 shares issued and outstanding
|
-
|
-
|
|||||
Common
stock, $.001 par value, 300,000,000 shares authorized,
88,063,305 and 88,063,305 shares issued and
outstanding
on March 31, 2007 December 31, 2006 respectively
|
88,063
|
88,063
|
|||||
Additional
paid-in capital
|
13,651,157
|
13,651,157
|
|||||
Treasury
stock, $.001 par value, 8,218,305 common shares on
March 31, 2007 and December 31, 2006
|
(329,977
|
)
|
(329,977
|
)
|
|||
Accumulated
deficit
|
(11,387,491
|
)
|
(11,696,060
|
)
|
|||
Total
stockholders’ equity
|
2,021,752
|
1,713,183
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
4,864,042
|
$
|
4,045,013
|
|||
|
2007
|
2006
|
|||||
|
|
|
|||||
REVENUE
|
$
|
1,439,981
|
$
|
1,457,523
|
|||
|
|||||||
COST
OF REVENUE
|
391,026
|
449,789
|
|||||
|
|||||||
GROSS
PROFIT
|
1,048,955
|
1,007,734
|
|||||
|
|||||||
OPERATING
EXPENSES:
|
|||||||
Selling
general and administrative expenses
|
708,395
|
762,730
|
|||||
|
|||||||
INCOME
FROM OPERATIONS
|
340,560
|
245,004
|
|||||
|
|||||||
OTHER
INCOME (EXPENSES)
|
(31,992
|
)
|
(57,322
|
)
|
|||
|
|||||||
INCOME
BEFORE INCOME TAXES
|
308,568
|
187,682
|
|||||
|
|||||||
INCOME
TAXES
|
-
|
-
|
|||||
|
|||||||
NET
INCOME
|
$
|
308,568
|
$
|
187,682
|
|||
|
|||||||
BASIC
AND DILUTED EARNINGS PER SHARE
|
$
|
0.00
|
$
|
0.00
|
|||
|
|||||||
WEIGHTED
AVERAGE SHARES
|
|||||||
OUTSTANDING
- BASIC AND DILUTED
|
88,013,305
|
88,013,305
|
|||||
|
2007
|
2006
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|||||
Net
income
|
$
|
308,568
|
$
|
187,682
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization expense
|
305,855
|
238,260
|
|||||
Bad
debt expense
|
2,534
|
4,322
|
|||||
(Increase)
decrease in:
|
|||||||
Accounts
receivable
|
(19,264
|
)
|
(19,435
|
)
|
|||
Prepaid
expenses
|
4,949
|
(8,840
|
)
|
||||
Increase
(decrease) in:
|
|||||||
Accounts
payable
|
(52,331
|
)
|
285,509
|
||||
Accrued
expenses
|
(152,444
|
)
|
145,044
|
||||
Deferred
revenue
|
90,340
|
249,326
|
|||||
Net
cash provided by operating activities
|
488,207
|
1,081,868
|
|||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Other
assets held for resale
|
11,609
|
(5,271
|
)
|
||||
Purchase
of property and equipment
|
(21,033
|
)
|
(200,963
|
)
|
|||
Purchase
of non-compete
|
(35,000
|
)
|
-
|
||||
Purchase
of customer list
|
(966,143
|
)
|
(686,748
|
)
|
|||
Net
cash (used in) investing activities
|
(1,010,567
|
)
|
(892,982
|
)
|
|||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Net
proceeds from notes payable - stockholders
|
-
|
52,483
|
|||||
Net
proceeds from notes payable
|
976,196
|
452,069
|
|||||
Repayment
of notes payable - stockholders
|
(46,861
|
)
|
(37,457
|
)
|
|||
Repayment
of notes payable
|
(304,440
|
)
|
(792,868
|
)
|
|||
Issuance
of common stock
|
-
|
200,000
|
|||||
Net
cash (used in) financing activities
|
624,895
|
(125,773
|
)
|
||||
|
|||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
102,535
|
63,113
|
|||||
|
|||||||
CASH
AND CASH EQUIVALENTS -BEGINNING OF PERIOD
|
129,453
|
36,047
|
|||||
CASH
AND CASH EQUIVALENTS -END OF PERIOD
|
$
|
231,988
|
$
|
99,160
|
|||
a)
|
Increase
revenue by acquiring customers in target markets at competitive
prices;
|
b)
|
Up
sell value-added products and services to existing customer base
to
maximize average revenue per user
(ARPU);
|
c)
|
Leverage
economies of scale to reduce overall operating
expenses;
|
d)
|
Maximize
operational efficiency through the deployment of
technology;
|
e)
|
Reduce
supplier costs by securing more favorable rates and terms through
wholesale partnerships and other methods.
|
March
31, 2007
|
||||||||||
|
Corporate
|
Internet
|
Consolidated
|
|||||||
Revenue
|
$
|
-
|
$
|
1,439,981
|
$
|
1,439,981
|
||||
Operating
Income (loss)
|
$
|
(3,479
|
)
|
$
|
344,039
|
$
|
340,560
|
|||
Depreciation
and amortization
|
$
|
-
|
$
|
305,855
|
$
|
305,855
|
||||
Interest
expense
|
$
|
-
|
$
|
35,469
|
$
|
35,469
|
||||
Intangible
assets
|
$
|
-
|
$
|
3,837,442
|
$
|
3,837,442
|
||||
Total
assets
|
$
|
-
|
$
|
4,864,042
|
$
|
4,864,042
|
|
|
|
|
|||||||
|
Corporate
|
Internet
|
Consolidated
|
|||||||
Revenue
|
$
|
-
|
$
|
1,457,523
|
$
|
1,457,523
|
||||
Operating
Income (loss)
|
$
|
(35,243
|
)
|
$
|
280,247
|
$
|
245,004
|
|||
Depreciation
and amortization
|
$
|
$
|
238,260
|
$
|
238,260
|
|||||
Interest
expense
|
$
|
-
|
$
|
60,969
|
$
|
60,969
|
||||
Intangible
assets
|
$
|
-
|
$
|
3,357,048
|
$
|
3,357,048
|
||||
Total
assets
|
$
|
-
|
$
|
4,080,714
|
$
|
4,080,714
|
Customer
list
|
$
|
594,535
|
||
Non-compete
agreement
|
10,000
|
|||
Purchase
price
|
$
|
604,535
|
Accounts
receivable
|
$
|
4,310
|
||
Fixed
assets
|
5,500
|
|||
Customer
list
|
92,029
|
|||
Non-compete
agreement
|
5,000
|
|||
Deferred
revenue
|
(16,839
|
)
|
||
Purchase
price
|
$
|
90,000
|
|
2006
|
|||
Net
sales
|
$
|
1,465,370
|
||
Gross
profit
|
$
|
1,015,581
|
||
Selling,
general and administrative expenses
|
$
|
762,730
|
||
Net
income
|
$
|
195,529
|
||
Basic
income per share
|
$
|
0.00
|
|
2006
|
|||
Net
sales
|
$
|
1,652,347
|
||
Gross
profit
|
$
|
1,157,558
|
||
Selling,
general and administrative expenses
|
$
|
847,151
|
||
Net
income
|
$
|
253,085
|
||
Basic
income per share
|
$
|
0.00
|
Domain
name
|
$
|
200,000
|
||
Accounts
receivable
|
31,732
|
|||
Customer
list
|
564,425
|
|||
Non-compete
agreement
|
10,000
|
|||
Deferred
revenue
|
(231,815
|
)
|
||
Purchase
price
|
$
|
574,342
|
|
2006
|
|||
Net
sales
|
$
|
1,491,852
|
||
Gross
profit
|
$
|
1,042,063
|
||
Selling,
general and administrative expenses
|
$
|
776,072
|
||
Net
income
|
$
|
207,908
|
||
Basic
income per share
|
$
|
0.00
|
Customer
list
|
95,463
|
|||
Non-compete
agreement
|
10,000
|
|||
Equipment
|
10,000
|
|||
Deferred
revenue
|
(19,719
|
)
|
||
Purchase
price
|
$
|
95,744
|
|
2006
|
|||
Net
sales
|
$
|
1,580,739
|
||
Gross
profit
|
$
|
1,129,950
|
||
Selling,
general and administrative expenses
|
$
|
807,141
|
||
Net
income
|
$
|
257,249
|
||
Basic
income per share
|
$
|
0.00
|
December
31, 2003
|
$
|
134,000
|
||
December
31, 2004
|
$
|
1,871,433
|
||
June
30, 2005
|
$
|
4,071,163
|
||
June
30, 2006
|
$
|
24,988,912
|
||
September
30, 2006
|
$
|
10,611,258
|
a)
|
Increase
revenue by acquiring customers in target markets at competitive
prices;
|
b)
|
Up
sell value-added products and services to existing customer base
to
maximize average revenue per user
(ARPU);
|
c)
|
Leverage
economies of scale to reduce overall operating
expenses;
|
d)
|
Maximize
operational efficiency through the deployment of
technology;
|
e)
|
Reduce
supplier costs by securing more favorable rates and terms through
wholesale partnerships and other methods.
|
|
For
the three months ended March 31, 2007 (unaudited)
|
|||||||||
|
Corporate
|
Internet
|
Total
|
|||||||
Revenue
|
$
|
-
|
$
|
1,439,981
|
$
|
1,439,981
|
||||
Cost
of revenue
|
-
|
391,026
|
391,026
|
|||||||
Gross
profit
|
-
|
1,048,955
|
1,048,955
|
|||||||
|
||||||||||
Operating
expenses
|
3,479
|
704,916
|
708,395
|
|||||||
Income
(loss) from operations
|
(3,479
|
)
|
344,039
|
340,560
|
||||||
Other
income (expense)
|
-
|
(31,992
|
)
|
(31,992
|
)
|
|||||
Net
income (loss)
|
$
|
(3,479
|
)
|
$
|
312,047
|
$
|
308,568
|
|||
|
|
For
the three months ended March 31, 2006 (unaudited)
|
|||||||||
|
Corporate
|
Internet
|
Total
|
|||||||
Revenue
|
$
|
-
|
$
|
1,457,523
|
$
|
1,457,523
|
||||
Cost
of revenue
|
-
|
449,789
|
449,789
|
|||||||
Gross
profit
|
-
|
1,007,734
|
1,007,734
|
|||||||
|
||||||||||
Operating
expenses
|
35,243
|
727,487
|
762,730
|
|||||||
Income
(loss) from operations
|
(35,243
|
)
|
280,247
|
245,004
|
||||||
Other
income (expense)
|
-
|
(57,322
|
)
|
(57,322
|
)
|
|||||
Net
income (loss)
|
$
|
(35,243
|
)
|
$
|
222,925
|
$
|
187,682
|
|||
|
|
|
Corporate
|
Internet
|
Total
|
|||||||
EBITDA
|
$
|
(3,479
|
)
|
$
|
653,361
|
$
|
649,882
|
|||
Interest
expense
|
-
|
(35,469
|
)
|
(35,469
|
)
|
|||||
Taxes
|
-
|
-
|
-
|
|||||||
Depreciation
|
-
|
(14,740
|
)
|
(14,740
|
)
|
|||||
Amortization
|
-
|
(291,105
|
)
|
(291,105
|
)
|
|||||
Net
income (loss)
|
$
|
(3,479
|
)
|
$
|
312,047
|
$
|
308,568
|
|
Corporate
|
Internet
|
Total
|
|||||||
EBITDA
|
$
|
(35,243
|
)
|
$
|
522,154
|
$
|
486,911
|
|||
Interest
expense
|
-
|
(60,969
|
)
|
(60,969
|
)
|
|||||
Taxes
|
-
|
-
|
-
|
|||||||
Depreciation
|
-
|
(17,831
|
)
|
(17,831
|
)
|
|||||
Amortization
|
-
|
(220,429
|
)
|
(220,429
|
)
|
|||||
Net
income (loss)
|
$
|
(35,243
|
)
|
$
|
222,925
|
$
|
187,682
|
2007
|
2006
|
||||||
EBITDA
for the three months ended March 31,
|
$
|
649,882
|
$
|
486,911
|
|||
Interest
expense
|
(35,469
|
)
|
(60,969
|
)
|
|||
Taxes
|
-
|
-
|
|||||
Depreciation
|
(14,740
|
)
|
(17,831
|
)
|
|||
Amortization
|
(291,105
|
)
|
(220,429
|
)
|
|||
Net
income for the three months ended March 31,
|
$
|
308,568
|
$
|
187,682
|
a)
|
Increase
revenue by acquiring customers in target markets at competitive
prices;
|
b)
|
Up
sell value-added products and services to existing customer base
to
maximize average revenue per user
(ARPU);
|
c)
|
Leverage
economies of scale to reduce overall operating
expenses;
|
d)
|
Maximize
operational efficiency through the deployment of
technology;
|
e)
|
Reduce
supplier costs by securing more favorable rates and terms through
wholesale partnerships and other methods.
|
|
2007
|
2006
|
|||||||||||
Current
|
$
|
86,250
|
46
|
%
|
$
|
87,399
|
51
|
%
|
|||||
30
< 60
|
54,768
|
29
|
%
|
44,574
|
26
|
%
|
|||||||
60
+
|
46,338
|
25
|
%
|
38,653
|
23
|
%
|
|||||||
Total
|
$
|
187,356
|
100
|
%
|
$
|
170,626
|
100
|
%
|
(a) |
The
following are filed as exhibits to this form
10-QSB:
|
31.1 |
Certification
of President Pursuant to the Securities Exchange Act of 1934, Rules
13a-14
and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act
of 2002.
|
31.2 |
Certification
of Chief Financial Officer Pursuant to the Securities Exchange Act
of
1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
32 |
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|